February 2025 – Synergy Exchange

The British Pound continues outperforming most G10 currencies, benefitting from relative insulation against U.S. tariffs. Trump’s comments suggest minimal impact on the UK’s trade balance, as only 15% of British goods exports go to the U.S. In fact, with a neutral trade balance and a surplus in services, the Pound is seen as a safe haven during tariff uncertainties. Ultimately, analysts expect the Pound to maintain its strength despite global risks.

The Euro is facing pressure as President Trump’s tariffs target key industries in the Eurozone, particularly automobile manufacturing. These tariffs are expected to slow EU export growth, which will weigh on the Euro. As the Dollar strengthens due to the trade war, the Euro’s outlook weakens. Ultimately, the tariffs are anticipated to negatively impact the Eurozone economy, leading to a decline in the single currency’s value.

The U.S. Dollar surged after President Trump imposed additional tariffs, with the Dollar Index rising to a three-week high. Citi analysts predict the Dollar Index could trade between 106-110, with potential for a brief rise to 115. However, although the tariffs have strengthened the Dollar, analysts caution that further gains may be limited, as much of the tariff-related volatility has already been priced in, making it less attractive for new positions.